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Gov. Eric Holcomb signed into law Wednesday a controversial bill that could allow utilities to pass along certain costs to customers for federally mandated projects without having to get pre-approval for those projects from state regulators.
The bill comes one month after Duke Energy Indiana, the state’s largest electric utility, lost a legal fight in the state Court of Appeals to recover $212 million from customers for coal-ash site closures, remediation and financing costs.
Holcomb signed Senate Bill 9 without comment, a move hailed by utilities as necessary to quickly comply with federal mandates and criticized by a consumer group as giving utilities a free hand to pass along costs.
The move could allow utilities to pass along millions of dollars in early or unexpected costs on federally mandated projects as long as state regulators eventually approve them.
“Another blank check to utilities and more rate increases to consumers,” Ben Inskeep, program director of Citizens Action Coalition of Indiana, a utility consumer group, tweeted on Wednesday.
State Rep. Matt Pierce, D-Bloomington, said the bill would allow a utility to “choose whatever pathway it wants” to comply with a federal mandate, whether it’s the least expensive or most expensive.
But utilities say they need such a law to make sure they can comply swiftly with federal mandates, without long delays from state regulators.
Danielle McGrath, president of the Indiana Energy Association, a trade group representing large electrical and natural gas providers, said complying with federal mandates is not optional.
“Utilities incur significant costs, such as detailed design and engineering studies, to develop a compliance project and prepare an application for regulatory approval, and there are further compliance costs pending that approval,” she said to IBJ in an email Wednesday. “State regulators need that information in order to make a decision as to whether the utility has in fact complied with the requirements.”
She pointed out that state utility regulators must eventually review and approve all costs of compliance before they can be included in rates.
The legislation, Senate Bill 9, started out as much less controversial, simply requiring an electric or natural gas utility to notify the Indiana Utility Regulatory Commission in advance if it decided to close or sell a generating facility earlier than announced in its long-range plans.
“To open a new generation facility, IURC has to approve it,” the bill’s author, Sen. Jean Leising, R-Oldenburg, said last week in the House utilities committee. “But to close one, currently, there’s no regulation or requirement. So. I thought that perhaps we really did need something in that regard.”
In recent years, utilities around the state have announced a series of sweeping plans to close coal-fired generating units years earlier than previously announced in favor of cleaner forms of energy, such as wind, solar and natural gas.
The bill also prohibited utilities that retire coal plants earlier than planned from increasing customer rates to pay off those plants in a shorter time frame unless state regulators find a rate adjustment is necessary to provide reliable service.
The issue came to the fore last month when the Indiana Court of Appeals ruled that state regulators shouldn’t have approved Duke Energy’s request to recover costs related to a federal environmental mandate for coal-ash cleanup that were incurred before the energy company received approval.
In response, Rep. Ed Soliday, R-Valparaiso, the committee chairman, introduced an amendment that would allow utilities to book expenses on federally mandated projects and recover them from customers without pre-approval.
He said utilities need to move quickly to respond to federal mandates, and don’t have time to wait for hearings before state regulators before beginning engineering studies. Such procedures can delay work, and push the utility beyond certain time limits prescribed by law.
“We have five cases before the IURC right now,” he said during last week’s committee hearing. “They’re all on time clocks.”
Duke Energy Indiana said the costs in question involved work to close coal ash basins at power plants to meet state and federal standards. In November 2021, the IURC issued an order allowing the utility to recover from customers these federally mandated costs.
Coal ash is a toxic byproduct of burning of coal in power plants to create electricity. Over time, utilities have dumped tons of ash into unlined, industrial waste ponds, but the federal government has begun ordering them to clean up the ponds, which can sometimes grow into small lakes, and leak toxic metals into underground streams or nearby rivers.
Consumer groups appealed the IURC order, and the Court of Appeals ruled that costs should have been pre-approved by state regulators before they were incurred by the utility.
Duke Energy spokeswoman Angeline Protogere said Wednesday in an email to IBJ that the court ruling “is contrary, however, to the intent of the Federal Mandates Statute—which encourages utilities to comply in a timely manner with state and federal regulations, such as environmental rules, and seek to recover those costs through an application with state utility regulators, which can be at a later date. No costs can be passed on to customers, though, without regulatory review first.”
She said in order for state utility regulators to make an informed decision about whether a utility can recover costs through rates, they need data – including such things as detailed design and engineering studies.
“The court’s decision essentially disallows utilities to recoup the expense of those costly, detailed plans,” Protogere said. “The result is that utilities aren’t incentivized to carefully prepare and plan before bringing a regulatory application before state regulators.”
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Holcomb is corporatist shill.
Consulting/lobbyist position with Duke awaiting him?
B-I-N-G-O!
Utilities are caught between a rock and a hard place, with required federal regulatory compliance on one hand and state regulatory rate approvals on the hand. If Indiana consumer advocates don’t like a future action by a utility, they need to take the matter to federal court.
What happened was is that despite the ability to seek preapproval through several avenues before spending the money – Duke chose not to seek preapproval and therefore did not follow the process and couldn’t recover after the fact. That was the crux of the Supreme Ct. decision. Whenever consumers win in the courts, the utilites get the statutes changed. When was the last time the legislature went to bat for the consumers?
Is there even one issue the our state gop legislature will stand up for the people of Indiana?
no
As long as people keep voting straight tickets and we get a super majority of one party in power for multiple years in a row the interests of the people will not be served. No matter your party affliation a super majority is NOT good government.
Agree. And you feel the same way about the City of Indianapolis government, right?
Consumers screwed by the Governor once again. Wait and see if there isn’t a future appointment for him on Utility Board or as Lobbyist for big utility once he is out of office. Legislators are also dishonest and crooked as day is long. Consumers can’t win in this game.
Get ready people – the Green new deal is going to cost ALL of us major increases in electricity/energy costs! Get ready for $1000 monthly bills for an average home. You get the government you vote for!
And blaming Holcomb is inappropriate. These are Federal requirements.
“Danielle McGrath, president of the Indiana Energy Association, a trade group representing large electrical and natural gas providers, said complying with federal mandates is not optional.”
Blame Biden.
We the people get the best government when different parties control one of the 2 houses and the Governorship. At least then we get the benefit of legislators with differing opinions have to discuss and negotiate with each other, ultimately compromising to get laws passed. Having one party in control of all 3 with a Super Majority gives them power to not care about constituents – they don’t fear us voting them out of office – so they don’t feel strong obligation to do what is best for us. Having a valid 3rd party or control by another party of one branch of government would be a great thing – but difficult to accomplish. Consider that when you vote.
I hope the regulators have the ability to review the costs passed through due to Federal mandates to make sure they are not including costs that should be in regular rate reviews.
Duke
Yeh, McGrath is likely a supporter of AOC, Miss KnowNothing-Out-of-Her-League-Miss New Green Deal herself. She is a Dumb-o-crat too, let’s not forget.
Talk about forgetting, which I have not, and perhaps our 2 branches of lawmakers likely have or never bothered to delve into this matter, well, here’s some history. There used to be the Indiana utility known as Public Service of Indiana (PSI). Sometime in the ‘70’s thereabout, PSI supposedly conducted some sort of 1st rate engineering to eventually build a nuke plant on the Ohio River down by Madison, Indiana. They dubbed it Marble Hill, began construction, got going, and watched the change orders begin flowing, one after the other.
Fast forward months (some years), and PSI decided they had to abandon their boondoggle, never generating one kilowatt. Why would ratepayers have to pay for PSI’s errors and omissions? THEY SHOULD NOT!!! Mis-management of the project. Stay out of ratepayers’ wallets.
Fast forward again to when Duke buys out PSI. Duke begins their schmoozing of IURC and thus begins another saga……..its Coal Gasification boondoggle project down in Edwardsport, Indiana. More of the same “marvelousy”engineering for what seemingly shouldn’t have been as complex as engineering a nuke plant. Brother, were Duke ratepayers duped on the Edwardsport project. At the time the project was envisioned, I recall a construction cost price tag reported to be $1.9 billion. Back to the IURC, Duke reports they need to up the price tag because of their lack of control of cost management (ooooops, typo there…..the word was “mismanagement“). Change orders start flying. Of course those were all “adds” and time goes by the cost of this boondoggle, mis-management, exercise and all its apparent engineering errors and omissions and the cost, in round numbers as had been reported, had ballooned to $3.6 billion; likely higher than that because of startup problems after Duke thought their project was complete; another laughable reporting from Duke. Back again to watchdog IURC group, supposedly watching the Indiana utility companies. The “R” in that group stands for “regulatory”. Really laughable!!!!!!!!! Wonder how many rubber stamps they go through / have gone through over the years.
And here we are again, needing to fix utility companies’ errors of basically a huge environmental contamination associated with holding ponds storing their by-product, coal ash. Oh, I almost forgot, it’s ratepayers fault because of ratepayers’ basic everyday need for electricity. So, IURC says to ratepayers, “pay up”. The supposed quoted cost of $212 million………Duke probably has purposefully mis-quoted that number because they’re such mis-managers of engineering, construction and construction cost control and control over errors and omissions………..is likely pushing $1 billion or even more. What will the true, actual costs be???? No problem, they’ll go back to that control agency, IURC, and do their usual schmooz job on the members, then bump the issue back to a Courtroom and so on and so forth. Same old sorry broken record. Maybe the Duke shareholders could demand (ha, lol) some accountability (ha, lol again) of the Duke engineering & construction groups. Or perhaps shareholders should open up their collective wallets to pay for their company’s boondoggles and mistakes.
Who’s in charge? Company Shareholders and in Indiana, the IURC.
And Duke plans to close all of its coal fired generating plants by 2035 and replace all of those with clean producing facilities at some hardly in fathomable costs. And so, watch out for such cost numbers when Duke comes to town in their schmoozing clothes throwing cost numbers around. Anticipate doubling or tripling such costs. Someone mentioned in one of the posts to expect $1000/month electricity bills. I would echo that and if Duke holds with its plans to close its coal fired generating plants, what will the monthly costs be? Lastly, how soon will Duke close its fairly new, cost-overrun-from-hell project, its Coal Gasification plant in Edwardsport? Duke says they have to act quickly and spend lots of money…….it’s carte blanche to Duke and “open your checkbooks ratepayers”.